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The Profit and Loss Appropriation Account

The profit and loss appropriation account which is the extended section of the profit and loss account shows the distribution of the net profit among the partners. This account is credited with the net profit and interest on drawings, and debited with salary and interest on capital. The balance of the net profit is shared by the partners in their profit sharing ratio as shown below:

 

Trading and Profit and Loss and Appropriation account for the year ended ...........

$ $ $
Sales 31,000
Less Cost of goods sold:
Opening stock as at ..... 1,850
Purchases 12,500

14,350
Less Closing stock as at .... 1,720 12,630


Gross profit 18,370
Less Expenses:
Rent 500
Lighting and heating 270
Insurance 360
Office expenses 160
Advertising 340
Wages 2.600
General expenses 220
Motor vehicle expenses 750
Bad debts written off 120
Bank interest and charges 150
Depreciation 400 5,870

Net profit 12,500
Add Interest on drawings:
David 51
Goliath 19

70

12,570
Less Salary: Goliath 1,200
Interest on capital:
David 1,500
Goliath 1,000

2,500

3,700

8,870
Balance of profits shared:
David 3/5 5,322
Goliath 2/5 3,548

8,870

Last Updated (Saturday, 11 September 2010 15:06)